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Have you been wondering about the multiple companies out there soliciting you to change your utility provider? What are they talking about? What’s the “catch” if I switch? Can I really save money if use another utility provider instead of my local one?  The questions go on and on… I have recently asked myself the same questions, so I ventured out and do some of my own research and here is what I can share with you.

USA Deregulation map

Question #1: , “Can I use a utility other than my local utility to provide my home’s electric and gas?!”

Answering this question starts with defining regulated vs. deregulated states.   What I’ve gathered is that regulated states have a governing body that dictates all energy producing and delivering processes, including pricing.  In these regulated states, Wisconsin, Tennessee, the Carolina’s and Nevada to name a few, only the local utility designated by the governing agency is able to distribute and bill for energy.  The consumers have no choice in price, who or how utilities are delivered to their homes.

What deregulation has done, is that it has allowed other third party energy producers to enter markets and offer the energy they generate at the price they choose to sell it for.  For deregulated states, such as Ohio (for both gas and electricity) and Kentucky (for gas only at this time), energy production prices are not regulated and consumers can choose whom they would like to purchase their energy from!  What does NOT change in deregulated states is the fact that the delivery of energy is still governed by the state and local entities and solely provided by your local utility.  In Ohio, the Public Utility Commission of Ohio (PUCO) sets and regulates these delivery rates.

Ex: My local utility is Duke Energy.  Duke owns all of the power lines, service trucks, electric and gas meters etc. in my area. Because of Ohio’s deregulation law I have the right to purchase utilities NOT generated by Duke and have that energy flow through the lines (be it gas or electric) that Duke continues to own and operate.

  

Question #2: “How much will I be saving by making the change to one of these third party energy providers?”

For an answer to this question, I actually called Duke Energy’s Customer Choice hotline, and here is what I found.  Of course the specifics of this response are only applicable for Duke Energy Ohio customers….

 

When looking at the “Explanation of Current Charges” table on page two of your bill, (see my bill as an example below) the “Gas/Electric Cost recovery” line item is the one affected by switching providers.  This is the amount the utility company actually charges to produce the commodity.  In this case we are referring to one CCF of gas @ $.56021750 . Wouldn’t we all be happy if we were only paying $0.56 for one CCF of gas?! Well, that is not the case. Unfortunately we also have to pay delivery fees, riders (temporary charges approved by the PUCO) and “usage charges” that are added to that base rate of $0.5602 to pay for the transmission of that energy.   After it’s all said and done we are paying approximately $1.00/CCF of gas!

 

This is an example of my utility bill

This is an example of my utility bill

When comparing cost of gas or electric you will be comparing the generation cost ONLY, not the other fees.  Another important place to look on your bill (for all of the Duke Energy customers out there) is on page two above the “Explanation of Current Charges” table.  There is a paragraph that outlines what Duke is currently charging their customers for gas and electric:

  Duke's current gas rate In this example, $.5602/CCF of gas is the price you will want to compare other rates to.

 

Question #3:  “Which provider should I choose?”

For this I looked to my local utility and my governing body (PUCO) to let me know who the approved companies are out there.  For Ohio customers you can find this list at: http://www.duke-energy.com/ohio-customer-choice/certified-suppliers/list-of-certified-suppliers.asp. This is a list of providers that follow the PUCO guidelines and in doing so are legitimate energy providing companies.

*** Important note: If switching to a third party utility provider, please make sure to review the contract terms!  I have seen companies who offer a very low introductory price and after a few months they hike the price up.  My advice: make sure your provider locks their rates in for at least 12 months and that they DO NOT charge a cancellation fee for terminating your contract.

 

Well, I hope this information has helped explain the Who, Why and How of switching utility providers.  In summary: Yes, you can save money by changing to a reputable third party energy provider, but make sure you double check your contract terms!

 

 

 

 

 

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